Physician Ownership & Referral Act


In 1991, Congressman Pete Stark authored the Ethics in Patient Referrals Act, called Stark I, to prevent doctors from referring Medicare beneficiaries to clinical labs that they owned. After noting that the law left a loophole for other clinical services, he introduced the Physician Ownership and Referral Act to extend the referral ban to additional health services.

Services Covered

The self-referral ban extends to clinical laboratory services, radiation therapy, durable medical equipment, physical therapy, prescription drugs, home infusion therapy and similar services. Physicians who own or invest in providers of these services may not refer Medicare patients to these companies.


Stark I and II allow an exception to the ban if the doctor personally performs the specified services or if the Medicare patient lives in a rural area, according to the AAPS. The law also notes other exceptions, such as items or services of minor value. The Comprehensive Physician Ownership and Referral Act, also called Stark II, is a law that Congress passed in 1993 to prohibit physicians from referring Medicare patients to providers of certain health services that the referring doctor owns wholly or partially, according to the Association of American Physicians and Surgeons.